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Economy of Russia

Russia has a high-income mixed economy with state ownership in strategic areas of the economy. Market reforms in the 1990s privatized much of Russian industry and agriculture, with notable exceptions in the energy and defence-related sectors.

Some sources estimate that Russia contains over 30 percent of the world's natural resources. The World Bank estimates the total value of Russia's natural resources at $75 trillion US dollars. Russia relies on energy revenues to drive most of its growth. Russia has an abundance of oil, natural gas and precious metals, which make up a major share of Russia's exports. As of 2012 the oil-and-gas sector accounted for 16% of the GDP, 52% of federal budget revenues and over 70% of total exports.

Russia has a large and sophisticated arms industry, capable of designing and manufacturing high-tech military equipment, including a fifth-generation fighter jet, nuclear powered submarines, firearms, short range/long range ballistic missiles. The value of Russian arms exports totalled $15.7 billion in 2013—second only to the US. Top military exports from Russia include combat aircraft, air defence systems, ships and submarines.

In 2014, the Russian economy was the sixth largest in the world by PPP and tenth largest at market exchange rates. Between 2000 and 2012 Russia's energy exports fueled a rapid growth in living standards, with real disposable income rising by 160%. In dollar-denominated terms this amounted to a more than sevenfold increase in disposable incomes since 2000.

The Russian economy risked going into recession from early 2014 - mainly as a result of the falling oil prices, the 2014 Russian military intervention in Ukraine and the subsequent capital flight. However, the 2014 GDP growth remained positive at 0.6%. In 2015, the Russian economy shrunk by 3.7% and is expected to shrink further in 2016. However, the World Bank and the IMF estimate that Russia's economy will begin to recover by 2017.

In January 2016, the US company Bloomberg rated Russia's economy as the 12th most innovative in the world, up from 14th in January 2015 and 18th in January 2014. Russia has the world's 15th highest patent application rate, the 8th highest concentration of high-tech public companies, such as internet and aerospace and the third highest graduation rate of scientists and engineers.

Sectors

In Russia, services are the biggest sector of the economy and account for 58% of GDP. Within services the most important segments are: wholesale and retail trade, repair of motor vehicles, motorcycles and personal and household goods (17% of total GDP); public administration, health and education (12%); real estate (9%) and transport storage and communications (7%). Industry contributes 40% to total output. Mining (11% of GDP), manufacturing (13%) and construction (4%) are the most important industry segments. Agriculture accounts for the remaining 2%.

Energy

The mineral-packed Ural Mountains and the vast oil, gas, coal, and timber reserves of Siberia and the Russian Far East make Russia rich in natural resources, which dominate Russian exports. Oil and gas exports, specifically, continue to be the main source of hard currency.

The petroleum industry in Russia is one of the largest in the world. Russia has the largest reserves, and is the largest exporter, of natural gas. It has the second largest coal reserves, the eighth largest oil reserves, and is the largest exporter of oil in the world in absolute numbers.

Mining

Russia is also a leading producer and exporter of minerals and gold. 90% of Russian exports to the United States are minerals or other raw materials. Russia is the largest diamond-producing nation in the world, estimated to produce over 33 million carats in 2013, or 25% of global output valued at over $3.4 billion, with state-owned ALROSA accounting for approximately 95% of all Russian production.

Fishing and forestry

The Russian fishing industry is the world's fourth-largest, behind Japan, the United States, and China.

Russia has more than a fifth of the world's forests, which makes it the largest forest country in the world.

Agriculture

Russia comprises roughly three-quarters of the territory of the former Soviet Union. Following the breakup of the Soviet Union in 1991 and after nearly 10 years of decline, Russian agriculture began to show signs of improvement due to organizational and technological modernization. Private farms and garden plots of individuals account for over one-half of all agricultural production.

Industry

In Russia, industrial production measures the output of businesses integrated in industrial sector of the economy such as manufacturing, mining, and utilities.The defence and aircraft industries are important employers and are able to offer internationally competitive products for export.

Defence industry

Russia is the world's second largest conventional arms exporter after the United States. The most popular types of weaponry bought from Russia are Sukhoi and MiG fighters, air defence systems, helicopters, battle tanks, armored personnel carriers and infantry fighting vehicles.

Aerospace

Aircraft manufacturing is an important industry sector in Russia, employing around 355,300 people. The Russian aircraft industry offers a portfolio of internationally competitive military aircraft such as MiG-29 and Su-30, while new projects such as the Sukhoi , Superjet 100 are hoped to revive the fortunes of the civilian aircraft segment.

Automotive industry

Automobile production is a significant industry in Russia. Russia was the world's 15th largest car producer in 2010, and accounts for about 7% of the worldwide production.

Electronics

Russia is experiencing a regrowth of microelectronics, with the revival of JCS Mikron. An example of a successful Russian consumer electronics company is Tele-systems, whose products are sold in over 20 countries.

Services

Retail

As of 2013, Russians spent 60% of their pre-tax income shopping, the highest percentage in Europe. This is possible because many Russians pay no rent or house payments, owning their own home after privatization of state-owned Soviet housing.

Banking

Money on deposit with Russian banks represents only 7% of GDP. Sberbank receives preferential treatment from the state and holds 73% of all bank deposits.

Telecommunications

Russia's telecommunications industry is growing in size and maturity. Among the particular segments, the biggest share of the Russian IT market still belongs to hardware.

Transportation

Russian Railways accounts for 2.5% of Russia's GDP.

Construction

The most successful construction firms concluded contracts worth billions of dollars an planned to take on employees and purchase new building machinery. The downturn served to emphasise the importance of the government to the construction market.

Insurance

According to the Central Bank of Russia 422 insurance companies operate on the Russian insurance market by the end of 2013. Russian insurance market is in stagnation stage for the last four years, as premiums to GDP ratio net of life and accident insurance remains at the same level of 1.1% since 2010.

Information technology

The IT market is one of the most dynamic sectors of the Russian economy. Russian software exports have risen from just $120 million in 2000 to $3.3 billion in 2010. Russia is one of the few countries in the world with a home grown internet search engine who owns a relevant market share as the Russian-based search engine Yandex is used by 53.8% of internet users in the country.

This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Economy Of Russian Federation"

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